Before you take a loan, there are things lenders require you to do. They consider a few factors before they decide whether to offer you the loan or not. To be able to acquire a mortgage loan, you ought to pay attention to these factors so that you are aware of what is expected of you. While doing this, you need to ensure that you do not do anything to sully your credit score. Below are some of the factors explained in details.
First of all, your credit report is an extremely important element when applying for a mortgage loan. You should get copies of your credit report from the major bureaus and take you time to review them step by step. Be quite keen to notice errors because they may be a hindrance for you when searching for your home loan. In the procedure, you should ascertain whether your credit rating is worth making you eligible to get a loan or not. If your credit score falls in the prime range, you will definitely qualify for a loan. On the flip side, if it is considered subprime, then you will experience difficulty in becoming accepted.
What you earn is another factor that should not be swept under the carpet. You have to have a stable source of income in order to qualify for a mortgage. Lenders are more comfortable to lend loans to people who have a steady source of income than those who are self employed. The reason for this is that self employed applicants have intermittent income because not all of the times companies do nicely. Therefore, lenders see irregular income as a higher risk. As a self employed individual who is so much in need of a home mortgage, it’s recommended that you have a prime credit score and in addition, a lot of savings to convince your own lenders.
You should also consider the loan types and rates. Usually, there are three forms of loans. Namely, traditional loans which usually demand higher down payments, payments backed by the Veteran’s Administration that requires you to be a veteran or on active duty to be able to qualify and Federal Housing Administration which is recommended for first time home buyers. Regardless of the type of loan you settle for, always remember that your interest rates will depend on the current market conditions, your credit profile and the state of economy.
Another factor that you ought to consider when applying for a mortgage loan is credit card accounts. It is advised that You Don’t apply for new credit cards Or even close your latest accounts because they may create the creditors suspicious Of your activities should you know that you intend to submit an application for a home mortgage.